Network virtualization provides network abstractions (network equipment, network services, etc.) that provide the same services and have the same behavior as network hardware equipment, but is independent from the physical implementation of those network abstractions. For instance, logical networks may provide abstractions such as logical L2 switches, logical L3 routers, logical DHCP servers, etc. that provide the same services and have the same behavior as their physical counterparts from the viewpoint of clients connected to those abstractions.
Typical implementations of logical networks rely on network overlays, i.e. sets of tunnels that forward the packets forwarded through logical network over a fabric of physical networking equipment. Using network overlays or other techniques, logical network abstractions are decoupled from the physical hardware, e.g. logical L2 switches are typically not tied to the physical L2 switches in the fabric, and logical L3 routers are typically not tied to physical L3 routers in the fabric.
The decoupling between logical and physical network equipment allows for more efficient and flexible management. Logical network abstractions can be managed by software without requiring managing the physical equipment comprising the fabric. One advantage of this decoupling for management is the potential to perform monitoring in a more flexible way than in physical networks. A logical network's whole topology is typically known and managed by a logical network management system from a centralized point, and the connections between abstractions is easily managed in software. This allows for both more fine-grained control over monitoring, e.g. at the scale of individual packet forwarding rules in logical abstractions, and large-scale monitoring, e.g. at the scale of a whole logical network.